Coppola Comment

Hans Werner Sinn has a post on Project Syndicate which purports to explain why the plans of Greek finance minister Yanis Varoufakis are much cleverer than anyone has realised. I don’t disagree that Mr. Varoufakis’s plans are clever: indeed I have written several posts on Forbes explaining just how clever they are. But Professor Sinn’s explanation, sadly, is very wide of the mark. Here is Professor Sinn’s description of Mr. Varofakis’s strategy: Plan B comprises two key elements. First, there is simple provocation, aimed at riling up Greek citizens and thus escalating tensions between the country and its creditors. Greece’s citizens must believe that they are escaping grave injustice if they are to continue to trust their government during the difficult period that would follow an exit from the eurozone. Second, the Greek government is driving up the costs of Plan B for the other side, by allowing capital flight by its citizens. If it so chose, the government could contain this ...

Today, Liam Halligan in the Sunday Telegraph wrote an excellent article castigating the Eurozone leadership for running cap in hand to emerging markets for help when they haven't reformed their banking system or resolved the structural problems with the single currency. Halligan's articles are always well worth reading and this one is no exception. But there is something wrong. About three quarters of the way down the article he says this: "Obscure data shows that under so-called Target 2 operations, the ECB’s intra-eurozone payments system, the Bundesbank is owed a mighty €620bn by other member states. This stealth bail-out dwarfs German’s covert contributions to previous eurozone rescues, which themselves provoked bitter public criticism." The TARGET2 system has been the subject of much debate recently. There have been repeated claims, of which Halligan's is just the latest, that the Bundesbank's deficit in TARGET2 represents a "stealth bail...